In its April 2024 Treasury Minutes publication, the UK government has responded to the highly critical Public Accounts Committee report ‘HMRC performance in 2022–23’ which concluded that ‘HMRC’s customer service levels are at an all-time low because of conscious choices made by HMRC and HM Treasury’.
The government addresses the PAC’s key recommendation – to ensure HMRC’s customer services are sufficiently resourced to allow it to meet its service standards – contending that this objective has already been met. The government cites funds committed in the 2021 spending review, taking investment in HMRC from £4.3bn in 2019/20 to £5.2bn in 2024/25. The government also notes the continued drive towards online services, pointing out that in 2022/23 HMRC received over three million calls relating to tax code requests, password resets or getting a National Insurance number – all tasks that could be instead have been resolved online.
The response does, however, include the following commitment to maintaining taxpayer helplines: ‘HMRC’s helpline and webchat advisers will always be there for those taxpayers who need support because they are vulnerable, digitally excluded or have complex affairs.’
Other issues raised by the PAC included the following:
Providing easily accessible ways for taxpayers to complain about heavy handed treatment by debt collection agencies working on behalf of HMRC to collect tax debts. HMRC are to update its guidance accordingly by September 2024.
The fraudulent use of unconnected addresses for company registrations. By Summer 2024, HMRC are to update the PAC on the associated tax risks. The government also notes the strengthened controls around company registrations in the Economic Crime and Corporate Transparency Act 2023.
Explaining how fewer HMRC criminal prosecutions achieve ‘greater deterrence of egregious non-compliance’. The government intends to provide such explanation by summer 2024.
HMRC’s approach to IR35 is ‘deterring legitimate economic activity’ and should be assessed in terms of its impact on the use of contractors in different sectors. The government considers this recommendation to have been met, with various analysis having already been published by HMRC. The Check Employment Status for Tax (CEST) tool was updated on 27 March, for example, to record (on a voluntary basis) the sector in which the taxpayer operates – to help HMRC better identify ‘specific sectoral challenges’.
HMRC should review R&D claims from previous years to distinguish between ‘egregious fraud’ and honest mistakes. The government notes actions already taken, including ramping up HMRC’s R&D compliance teams (500 staff now vs around 100 in 2020/21), and the expected launch of the R&D disclosure facility ‘in spring 2024’ to encourage businesses and agents to make the first approach rather than waiting for HMRC to come calling.
In its April 2024 Treasury Minutes publication, the UK government has responded to the highly critical Public Accounts Committee report ‘HMRC performance in 2022–23’ which concluded that ‘HMRC’s customer service levels are at an all-time low because of conscious choices made by HMRC and HM Treasury’.
The government addresses the PAC’s key recommendation – to ensure HMRC’s customer services are sufficiently resourced to allow it to meet its service standards – contending that this objective has already been met. The government cites funds committed in the 2021 spending review, taking investment in HMRC from £4.3bn in 2019/20 to £5.2bn in 2024/25. The government also notes the continued drive towards online services, pointing out that in 2022/23 HMRC received over three million calls relating to tax code requests, password resets or getting a National Insurance number – all tasks that could be instead have been resolved online.
The response does, however, include the following commitment to maintaining taxpayer helplines: ‘HMRC’s helpline and webchat advisers will always be there for those taxpayers who need support because they are vulnerable, digitally excluded or have complex affairs.’
Other issues raised by the PAC included the following:
Providing easily accessible ways for taxpayers to complain about heavy handed treatment by debt collection agencies working on behalf of HMRC to collect tax debts. HMRC are to update its guidance accordingly by September 2024.
The fraudulent use of unconnected addresses for company registrations. By Summer 2024, HMRC are to update the PAC on the associated tax risks. The government also notes the strengthened controls around company registrations in the Economic Crime and Corporate Transparency Act 2023.
Explaining how fewer HMRC criminal prosecutions achieve ‘greater deterrence of egregious non-compliance’. The government intends to provide such explanation by summer 2024.
HMRC’s approach to IR35 is ‘deterring legitimate economic activity’ and should be assessed in terms of its impact on the use of contractors in different sectors. The government considers this recommendation to have been met, with various analysis having already been published by HMRC. The Check Employment Status for Tax (CEST) tool was updated on 27 March, for example, to record (on a voluntary basis) the sector in which the taxpayer operates – to help HMRC better identify ‘specific sectoral challenges’.
HMRC should review R&D claims from previous years to distinguish between ‘egregious fraud’ and honest mistakes. The government notes actions already taken, including ramping up HMRC’s R&D compliance teams (500 staff now vs around 100 in 2020/21), and the expected launch of the R&D disclosure facility ‘in spring 2024’ to encourage businesses and agents to make the first approach rather than waiting for HMRC to come calling.
